Pages 59-92

WORKING SESSION

The Unified Patent Court

Thomas KÜHNEN - Presiding judge at Düsseldorf Higher Regional Court - The bifurcation system in German practice

I. The bifurcation system and its features

Because Germany has a bifurcated jurisdictional system, decisions on a patent's validity and those on its infringement are the subject of distinct procedures before different bodies ("split proceedings" principle). Infringement proceedings are standard civil procedures and therefore conducted by the courts of ordinary jurisdiction - i.e. the Landgericht (regional court - "LG"), the Oberlandesgericht (higher regional court - "OLG") and the Bundesgerichtshof (Federal Court of Justice - "BGH") - in accordance with the procedural rules laid down in the Code of Civil Procedure (Zivilprozessordnung - "ZPO"). The losing party consequently has the standard rights of appeal available in such civil procedures (i.e. appeal to the OLG, then appeal against denial of leave to appeal or appeal on point of law to the BGH). By contrast, the validity of patents is a matter for the patent offices and (at the judicial stage) the Bundespatentgericht (Federal Patent Court - "BPatG") and the latter's judgments can be challenged by appeal to the BGH. Given this division of jurisdiction, the BGH alone has a special position in that it has a part to play, as final instance, in both infringement and validity cases. In infringement proceedings, its task is purely to review the lower court's application of the law, whereas on appeal against a BPatG ruling on validity, it must review the contested decision in both law and fact.

The effect of this bifurcated system, distinguishing between the courts having jurisdiction in infringement matters and those competent in validity cases, is twofold:

First of all, invalidity of the patent in suit cannot be entered as a defence in infringement proceedings. Rather, the court hearing the infringement action is bound by the patent grant and is not competent to give its own ruling on patentability.1 Thus, so long as the patent has not been definitively revoked or limited such that the contested embodiment is no longer covered by its scope of protection, the court cannot dismiss an infringement action on the ground that the patented subject-matter is not patentable. However, this does not mean that challenging the patent's validity in infringement proceedings is entirely futile. On the contrary, there are several corrective measures to offset the problem that the patent's invalidity is not a fully-fledged defence to a charge of infringement.

The second consequence of the bifurcated system is that the courts hearing the infringement action and those ruling on validity may interpret the same patent differently, but corrective measures can be taken in this respect too.

1. Stay of infringement proceedings

The court hearing an infringement action can take account of alleged non-patentability of the patent in suit by staying the proceedings either at a party's request or of its own motion until the validity proceedings have been closed at first instance or with final effect.2 Section 148 ZPO serves as the basis for this under national procedural law.

The court can stay the infringement proceedings where the patent in suit is the subject of opposition or revocation proceedings. Appeals to the BGH against a denial of leave to appeal can also be stayed,3 and indeed this is usually advisable if an appeal against a ruling on related validity proceedings is also pending before the BGH. By contrast, proceedings for injunctive relief cannot be stayed given the urgency inherent in such cases, which rules out any temporary standstill.

For the decision on whether or not to stay infringement proceedings, it is irrelevant whether the validity proceedings which would pre-empt their outcome have been brought by the defendant to the infringement action or a third party. Nevertheless, it will generally be in the defendant's interest to be in a position to influence the outcome of the validity question and there are basically two ways of doing so: either the defendant brings his own action for revocation or intervenes in an action previously brought by a third party. A party is entitled to intervene wherever the contested patent is liable to have an adverse effect on his business activity as a competitor.4 This can be readily considered the case if the intervener has already been warned to desist from infringement, or even sued in a court action for infringement. If the intervention is admitted, the intervener acquires the procedural status of a joined (i.e. independent) co-party (Section 69 ZPO).5 This has two important consequences: any decision taken in the revocation proceedings is legally binding on the intervener,6 which means that he cannot bring a fresh revocation action of his own if the revocation action in which he intervened is definitively dismissed. Whilst interveners must take the revocation proceedings as they stand, so that they are equally bound by any time limits already set and cannot request that the hearing date be postponed, their status is independent inasmuch as they can enter their own defence pleadings, even against the wishes of the main party they are supporting. If the latter withdraws its revocation action (e.g. following a settlement with the patent proprietor), this has no effect on the intervener, who is entitled to continue the proceedings alone. The same applies in the event of withdrawal of the appeal in any appeal proceedings, if the intervener only joined the proceedings at the appeal stage. Where, however, an intervener has already intervened in the first-instance proceedings, he must lodge his own appeal against any dismissal of the action in order to be able to pursue the appeal proceedings in the event that the main party withdraws its action or appeal (e.g. following a settlement).7

(a) Pre-emptive effect

For infringement proceedings to be stayed under Section 148 ZPO, the decision (to be postponed) must depend on the outcome of opposition or revocation proceedings pending elsewhere. As a rule, such "dependency" (or pre-emptive effect of the latter proceedings' outcome) can be established only if the claimant's allegation of unlawful infringement can be upheld. If no infringement can be established or if the defendant can cite grounds of justification, the opposition or revocation proceedings are not pre-emptive and the infringement action must be dismissed, irrespective of those proceedings' outcome.8

Only in exceptional cases can infringement proceedings be stayed even though it is unclear whether the patent has been infringed. A stay may be considered for reasons of procedural economy where the court would have to take evidence as to the facts of the alleged infringement or in support of the defendant's arguments in defence.9 Postponing the taking of evidence and staying the proceedings may then be justified if the requisite investigation would be particularly onerous, comprehensive or expensive and it is sufficiently certain that the patent is unlikely to be maintained. However, where an expert opinion may be required, the court must, as a rule, grant any request by the claimant that it be drawn up in parallel to the opposition or revocation proceedings.10 Firstly, a written opinion does not place a burden on the court hearing the infringement action or the defendant, the latter not even financially, because, should the patent ultimately be revoked, it will be the defeated claimant who has to bear its cost, so he also has to pay the advance fee. Secondly, the claimant can cite a legitimate concern in ensuring that obtaining an opinion does not cause an unnecessary delay in the enforcement of his patent rights. Such a delay would arise if the proceedings were initially to be stayed and the opinion not obtained until after the opposition or revocation proceedings had reached a different outcome than expected. The parties' interests are different where the question is whether an expert who has already issued a written opinion should be examined orally. This will generally make no sense, especially if the patent has been revoked at first instance and it is impossible to foresee whether the patent will be maintained and, if so, in what form.

If both parties request that the proceedings be stayed (as frequently happens where the patent has been revoked at first instance), it is appropriate to grant their request without any further ado, and in particular without any in-depth examination of pre-emptive effect, because infringement proceedings are proceedings between parties and an unwelcome decision should not be forced on them against their stated wishes if it is to be expected that, despite the still uncertain fate of the patent in suit, it will give rise to a further appeal in the infringement proceedings.

(b) Discretion

In deciding whether to stay the proceedings, the infringement court has discretion, which it exercises after a summary examination, based on the factual submissions, of the prospects of success of the opposition or action for revocation. To that end, the defendant must supply the court with its full pleadings in the opposition or revocation proceedings, including the references cited in those proceedings.

Whether the contested patent will prove to be valid at the end of the pending opposition or revocation proceedings can, of course, only be assessed in the light of the facts and arguments cited in those proceedings. That is why a reference cited by the defendant in the debate on staying the proceedings is not liable to justify a stay unless it has been cited in the opposition or revocation proceedings. And vice versa: a patent proprietor who only counters attacks on the validity of his patent in infringement proceedings and fails to do the same before the BPatG (e.g. to allow room for an interpretation differing from that relied on in the infringement proceedings) will generally be unable to prevent a stay of proceedings unless the attacks on validity are so implausible that they need not be refuted, even - or indeed especially - before the technically qualified judges sitting on the BPatG bench.

In one particular scenario, there is an exception to the rule that the prospect of a successful challenge to the patent depends on the situation in the pending validity proceedings. A prior national right within the meaning of Article 139(2) EPC cannot be taken as the basis for opposition to a European patent, but can serve as the basis for a (national) action for revocation of the German part of the European patent. At the same time, revocation actions are inadmissible so long as any European opposition proceedings are still pending.11 If the opposition proceedings are still pending during the infringement proceedings, a stay of proceedings would therefore have to be denied because the opposition, for legal reasons, cannot succeed on the basis of the prior national right, while a revocation action - which would thus be the sole means of achieving success - is not yet pending as a pre-emptive action and would anyway be inadmissible. Nevertheless, the BGH12 acknowledges the possibility of already staying infringement proceedings during still pending opposition proceedings if the soon possible revocation action is likely to succeed.13 However, there ceases to be any ground for staying the proceedings if, following closure of the opposition proceedings, the action for revocation is not swiftly brought.

Given this discretion, which - as will be explained in more detail below - is, in practice, only seldom exercised to the alleged infringer's advantage, all defendants should ensure that they launch their challenge to the patent as early as possible, either as soon as they take the business decision to produce and/or market the (potentially) infringing products or, at the latest, immediately after receiving a warning of future court action. They should also take the opportunity to ask the patent office to initiate an accelerated procedure to ensure that the opposition decision is taken, if not before, then at least within such a period of the hearing in the infringement proceedings that the court can await the decision on validity before delivering its own judgment (which it can postpone for a maximum of five months from the hearing closing that stage of the infringement proceedings14). European procedural law now expressly entitles parties and the court hearing the infringement action to request such accelerated processing.15

(aa) First instance

Since, owing to the lengthy duration of opposition and revocation proceedings, a stay of infringement proceedings considerably curtails the claimant's rights, in particular the temporary right to seek an order to desist from infringement, and given, moreover, the need to prevent abuse by defendants, the basic rule according to current case law is that first-instance infringement proceedings can be stayed only if it seems highly probable that the opposition or action for revocation will result in revocation of the patent.16

As a rule, the same applies even where the patent has already expired or will expire during the proceedings. Whilst the fact that there is no longer any question of a claim for a restraining order having effect in the future might make litigation appear less urgent, it equally diminishes the intensity of the allegations for the defendant, so that it is justified to stick to the general rules on staying proceedings. This approach to the detriment of the defendant to the infringement action is all the more appropriate as it would have been his responsibility to seek revocation of the patent before taking up his infringing conduct and so set things straight in good time, at the latest on receipt of the pre-court warning letter. A defendant who only launches an attack on the patent towards the end of the period for replying to the allegations of infringement (or even later) grossly neglects his own interests. It is therefore right that a stay of proceedings usually cannot be considered if the prior art cited against the patent is that already taken into account during the grant proceedings or unsuccessful opposition or revocation proceedings or is even more distant from the invention's subject-matter than that already examined.

This applies all the more so if the patent has already been maintained at first instance. In keeping with the statutory division of jurisdiction, the infringement court must normally accept this decision, which is taken by a bench including technical experts. In deciding whether to stay proceedings, the infringement court may not pre-empt all the issues at stake in the opposition-appeal or revocation-appeal proceedings. Rather, provided the line of argument supporting the validity decision taken in the opposition or revocation proceedings appears plausible and reasonable and is based on transparent grounds, the infringement court must abide by it and, unless there are extraordinary circumstances in a specific case, will have no reason to stay the infringement proceedings. A stay is only appropriate where the decision on validity is based on verifiably incorrect findings or a line of argument which the infringement court can no longer consider reasonable (e.g. as to novelty, inventive step, inadmissible extension) or where, for reasons other than negligence, different prior art is presented on appeal against the validity decision which, because it is closer to the invention than the prior art already examined, gives rise to the requisite likelihood that the patent will be revoked.17

The infringement court cannot make a finding that revocation is certain (which would result in an order to stay proceedings) if the technical facts at issue in the validity proceedings are so complex and/or complicated that it cannot gain a genuine insight into the circumstances.

The reverse is true if the patent has been revoked at first instance: generally speaking, the infringement proceedings should then be stayed.18 The infringement court can – exceptionally – refrain from staying proceedings only if, based on its own technical expertise, it can confidently find that the revocation was based on a manifestly erroneous assessment and predict with certainty that it will be overturned at the next instance.19 This situation will only arise if the facts of the case are technically straightforward enough to be sufficiently understood by the bench of non-expert judges, but not in cases involving complex inventions, e.g. in the field of electronics or chemistry.

If the patent has been limited at first instance in such a way that the contested embodiment no longer makes use of it, but the claimant continues, on appeal, to defend it as granted (and so as used by the contested embodiment), it is not for the infringement court to assess the likelihood that this appeal against partial revocation will succeed. Rather the infringement proceedings should be stayed until the appeal proceedings have been closed. Even if, in the infringement court's view, the appeal is unlikely to be granted and the contested embodiment is obviously no longer covered by the patent as maintained, dismissal of the infringement action is not an option. Whether the patent as granted is valid can only be decided by the bodies with grant jurisdiction; the infringement court is bound by their findings and has no power of its own to examine the matter. Thus, so long as the patent has not been finally revoked either in part or in its entirety, its fate is in abeyance, regardless of any prognosis reached by the infringement court, so that, until the validity proceedings have finally been closed, the action for infringement can still prove to be well founded and cannot be dismissed beforehand.20 This applies - irrespective of the binding effect of decisions under Article 111(2), sentence 1, EPC - even if a technical board of appeal has already held that the main claim as granted is not allowable and remitted the case to the opposition division for examination of unused auxiliary requests.21

A request for stay of proceedings based on an alleged public prior use cannot be granted if such use is not entirely self-evident in the light of the evidence adduced (i.e., in particular, official legal documents) but rather its proof requires (at least partly) witness testimony.22 The fact that witnesses will only be examined in the opposition or revocation proceedings, but not in infringement proceedings, already means that it is impossible to predict how they will actually testify and whether their testimony, assuming it supports the case made by the opponent or claimant seeking revocation, will even be considered credible. This wholly uncertain outcome precludes any assumption by the infringement court that the patent will almost certainly be revoked. It makes no difference whether or not written statements of the witnesses have been produced.

(bb) Second instance

The practice followed at the appeal stage with regard to staying proceedings is more generous if the defendant was found guilty of infringement at first instance.23 The idea behind this practice is that, because the claimant has provided the security required for provisional enforceability of the first-instance judgment (Section 709 ZPO), it is in his power to enforce his prohibitive patent rights and it is therefore more reasonable to stay appeal proceedings, which can at most result in enforceability of his rights without any security.24 But once again, the mere possibility that the patent will be revoked does not suffice; rather, it must be probable.25 If an action for an injunction becomes redundant because the patent has expired, so that the only remaining issue is enforcement of the claims for discovery of the accounts and destruction, it should, according to the case law of the OLG Karlsruhe,26 even suffice that, on a summary assessment of the challenges to validity, it can be established that there is a not entirely distant possibility that the patent will be revoked.27

If the LG wrongly dismissed the infringement action and the appeal court concludes that the defendant must be found guilty, the same rules apply to a stay of appeal proceedings as at first instance. They likewise apply where a new right has been introduced to the proceedings at the appeal stage and the opposing party has agreed to its examination or the court deems such examination expedient, if it is then found that this right has been infringed and that the claimant can derive rights from this finding.

(cc) Third instance

In the specific context of appeals against a denial of leave to appeal, the BGH28 has likewise acknowledged that is not appropriate to stay the proceedings merely because a revocation action is pending and its outcome may affect the assessment of infringement. Rather, what must be considered is the (contrary) interest of the party claiming infringement in a speedy conclusion to the infringement proceedings, to which more and more weight should be attached the later the revocation action is brought. It has been concluded from this that, where the action for revocation was not launched until after the conclusion of the fact-finding stages of the infringement procedure, a stay is appropriate only if it is manifestly likely to be granted.29 In the event of such a negligent defence strategy on the part of the party accused of infringement, it is sufficient to refer that party to the possibility of a bringing an action for restitution of rights (by analogy with Section 580 No. 6 ZPO), should the patent later be revoked.

Save for exceptional cases, the BGH generally tends to stay its final decision on infringement until it has reached a decision on the patent's validity on appeal in the revocation proceedings. The reason for this practice is that both decisions require interpretation of the patent and it must naturally be interpreted consistently.

(c) Combination of claims (in the alternative)30

Where there are misgivings about the validity of a patent as granted, it makes no sense for the claimant in the infringement proceedings to submit, in the alternative, a request based on a combination of claims (e.g. main claim and one dependent claim). He cannot avoid a stay of proceedings by bringing an action structured in this way, as such an alternative request can be granted only if it has been established that the main claim is unfounded, which is impossible so long as the revocation or opposition proceedings are still pending.

To avoid a stay of proceedings, the claimant must therefore opt to restrict his request unconditionally to that claim combination which is likely to be found valid. This will result in partial dismissal of the action and a pro rata allocation of costs only if, owing to this restriction, originally contested embodiments are no longer covered by the scope of the action. If all the contested embodiments remain covered, the claimant's action will have been a complete success from an economic point of view; he has merely chosen a more specific wording (i.e. that of the claims as limited) to identify the alleged infringement, which he is quite free to do and which prevents a partial defeat.

Even the court itself can, of its own motion, choose a wording which identifies the forms of infringement more specifically than the requests set out in the action, and this is appropriate, for example, where the parties to the validity proceedings dispute whether the claim wording which the claimant is seeking to enforce (e.g. the granted version) has been inadmissibly extended. This question can be left unanswered if, for the purposes of identifying the infringement, the court chooses a wording which, as a precaution, eliminates the allegedly inadmissible extensions. This is possible and expedient if all the contested embodiments remain covered by the more specific wording of the request and the question of extension cannot be unequivocally answered by the infringement court.

Of course, the claimant still has the option of citing the claims as granted in an alternative request, and it may be useful to do so in cases in which there is no need to abandon that wording, because there is still a chance that it will be maintained after all at the end of the validity proceedings. Such a "reverse" order of requests prevents definitive dismissal of the action in the event that the infringement court finds that the limiting features are not used. Rather, submitting an alternative request on this basis means that, if it reaches such a finding, the proceedings must be stayed, whereby the claimant gains time.

2. Appeal on point of law

Owing to the "split proceedings" principle, a situation can arise in which individual features of the patent claim are interpreted differently in infringement and validity proceedings, such that the respective decisions are then based on those contrary interpretations. Here too, the courts have developed a procedure designed to prevent this to some extent at least.

First of all, when interpreting the patent, the infringement court must take note of the validity courts' findings as relevant expertise and include them in its own reasoning.31 It will not deviate needlessly from those findings, but only if it has genuinely good reasons for doing so. Where the infringement court is an OLG and its interpretation diverges from that reached in the revocation proceedings, the scope for appealing against its ruling is, in principle, limited. If (as seldom happens in practice) the OLG denies leave to appeal on a point of law, the losing party's only option is to seek such leave from the BGH itself by appealing against the OLG's refusal. The legislation (Section 543(2) ZPO) sets out exhaustive grounds for granting such leave to appeal: either the case must raise issues of fundamental importance or a decision of the BGH must be needed to develop the law or ensure uniform case law. However, according to the BGH's case law, there is a ground for granting leave to appeal if the patent claim at issue in the infringement proceedings was interpreted differently in the (closed) revocation proceedings and that different interpretation would necessarily have led to a different decision on the infringement action.32 The ground for granting leave to appeal in such a case is the divergence in interpretation of the patent and the resulting need for the BGH to ensure consistent case law. If the revocation proceedings are not closed until after the deadline for substantiating the appeal against a denial of leave to appeal, the appellant's rights must be reinstated so as to enable him (ex post facto) to cite the relevant facts in support of his request for leave to appeal.33

Thus, the BGH's interpretation of the claimed features in the revocation proceedings ultimately prevails, even if the court investigating the facts of the infringement action arrived at its alternative interpretation after consulting experts. The legal reason for this is that, according to the BGH, determination of the technical meaning of a patent is a purely legal question,34 so that the BGH has unlimited competence to review and correct the fact-finding court's interpretation.35 For an infringement action still pending before a fact-finding court when the revocation-appeal proceedings are closed or brought only after such closure, the BGH's case law means de facto that that court has no choice but to base its assessment on the interpretation of the claimed features set out in the judgment on the revocation appeal. In cases of doubt, therefore, it may be expedient to stay the infringement proceedings until the BGH has given a ruling in the revocation-appeal proceedings, because any interpretation (irrespective of whether it has been made in consultation with experts) is from the outset merely provisional if it conflicts with a different interpretation subsequently made by the BGH.36 The infringement court is free of this constraint only if a final decision on validity has been issued without the involvement of the BGH (e.g. in opposition proceedings or revocation proceedings at first instance), in which case the decision is - as always - simply an expert opinion on how the invention is to be understood.

3. Interim injunction

That the patent's invalidity is not a fully-fledged defence to allegations of infringement also affects practice in the area of interim relief in patent cases. This is a matter for the infringement courts, though the OLG acts as final instance in this context.

(a) General

Interim injunctions can, in principle, be granted in patent infringement cases.37 They can be used to enforce an order to desist from infringement under Section 139(1) Patentgesetz (Patent Act) and - as is clear from Section 140b(3) Patent Act and subject to the conditions laid down there - the right to information on the infringing goods' origin and channels of distribution set out in Section 140b(1) and (2) Patent Act. By contrast, claims for damages and for presentation of accounts to prepare such claims cannot be enforced (safeguarded) by means of an interim injunction;38 nor can a claim for the recall of goods.39 However, it may be possible in individual cases to request that infringing objects be placed in the custody of the court bailiff40 as a means of safeguarding any claim to their destruction.

For a right to information under Section 140b Patent Act to be enforceable as a measure of interim relief, there must be "a manifest infringement". This can be established only if the legitimacy of the infringement allegation is not simply probable but beyond all reasonable doubt, so that it is virtually impossible that a different decision will be reached in the subsequent main proceedings.41

(b) Special situation under patent law

Patent infringement cases are special in that, unlike other civil disputes, they entail an assessment of technical facts, which usually requires a thorough exchange of written pleadings and oral arguments between the parties to enable the court - itself composed of laymen - to obtain an adequate basis for its decision. That is possible only to a limited extent in summary proceedings, and indeed may not be possible at all in some cases. For the defendant in particular, it is difficult in the short time available to research the prior art thoroughly with a view to challenging the validity of the patent. Yet an injunction will normally have serious implications for the defendant's commercial activity and, for its duration, amounts to definitive satisfaction of the claimant's claims.

To reduce the risk of an erroneous decision with serious implications, the approach taken by the courts is to consider issuing an interim injunction only if it is so clear that both the question of the patent's validity and that of its infringement42 will ultimately be settled in favour of the applicant for interim relief that there is no serious likelihood they will take the wrong interlocutory decision and have to rectify it in any subsequent main proceedings.43 The more clearly these two issues can be settled in favour of the patent proprietor, the less justification there will be nevertheless to deny him interim relief with a view to protecting any competitive interests of the defendant. Thus, if the patent is clearly valid or obviously being infringed, the situation is clear-cut and there will generally be no need to weigh up any other interests.44 In some cases, therefore, the clarity of the circumstances as such will indicate a need to grant interim relief.45

There is no rule of law that, where certain technologies are concerned, proceedings for an interim injunction can be ruled out from the outset, but there are indeed scenarios in which, for purely practical reasons, the court should refrain from conducting such proceedings because an examination of the technical material at issue requires expertise which it does not possess and can only acquire by consulting experts, which it may not do in such proceedings.46

(c) Legal validity of the patent at issue

Nevertheless, for doubts as to the patent's validity to lead to a refusal of an application for interim relief, the patent must have been challenged by way of opposition or an action for revocation because those are the only ways of actually defeating it.47 It therefore makes no sense for defendants in proceedings for interim relief simply to indicate grounds for opposition or revocation that could lead to revocation of the patent, if they have not actually initiated (by closure of the final oral hearing in the proceedings for interim relief at the latest) proceedings before the German Patent and Trade Mark Office, the EPO or BPatG in which the patent could be revoked on those grounds. If the time between the defendant's being notified of the application for interim relief and the hearing date is so short that he cannot reasonably be expected to challenge the patent by a formal action for revocation, it must at least be undoubtedly foreseeable that such an action will be brought in due course.48 The period within which the defendant can be expected to bring the action depends on the specific circumstances of the individual case, in particular the difficulty and complexity of the technical material and the defendant's ability to carry out research, which may be impeded by any public prior use or documents not readily available in publicly accessible databases (e.g. company brochures, conference materials, specialist literature, publications in Japanese). If the time between publication of the patent's grant and the hearing date is particularly short, so that the defendant cannot be expected even to perform a reasonable search for possible prior art, the court may even have to refuse the application for interim relief without reference to specific citations on the grounds that validity is uncertain and the possibility that relevant prior art might be found after a proper search cannot be dismissed entirely.49

However, as soon as the patent's validity has been challenged, the applicant for interim relief bears the burden of presenting a case capable of convincing the infringement court that the objections are unfounded and that the patent will undoubtedly survive the pending validity proceedings.50 Thus, contrary to the position in cases of a stay of proceedings under Section 148 ZPO, the infringement court must refuse the applicant's request if the prospects of success cannot be definitively clarified because the patented technology is so complex that it cannot confidently assess it.51

As a rule, the court can assume a sufficient likelihood of validity only if the patent has already been maintained in first-instance opposition or revocation proceedings.52 It is irrelevant whether those proceedings were conducted between the parties to the proceedings for interim relief or between third parties (e.g. previous proprietor of the patent in question and/or another competitor). That is why, generally speaking, an interim injunction cannot be granted if the patent is still the subject of pending opposition proceedings or such proceedings have not yet even started (because the patent has only just been granted). The applicant cannot overcome this problem by himself requesting, instead of an order, that the hearing be scheduled for a date in the distant future by which the defendant will have been able to search and cite any prior art precluding the patent's validity,53 because it is not a matter for the infringement courts to deal incidentally with an opposition or claim for revocation in the course of hearing an application for interim relief. Instead, to be able to rely on the patent in the context of proceedings for interim relief, a positive decision must have been issued by those bodies with appropriate jurisdiction and the requisite technical expertise.

Only in exceptional cases may it dispense with the need for a validity decision endorsing the applicant's position, for example if:

• the opposing party has already submitted its own objections during the grant proceedings, so that the patent grant can essentially be considered equivalent to a decision in adversarial opposition proceedings;
• there have been no validity proceedings because patentability is generally acknowledged (as reflected by the existence of reputable licensees or suchlike);
• it can already be established following the summary examination required as part of the interlocutory proceedings for interim relief that the objections to validity (which, of course, the opposing party must cite in those interlocutory proceedings54) are unfounded;
• extraordinary circumstances make it unreasonable to expect the applicant for interim relief to await the outcome of the opposition or revocation proceedings in view of the detrimental effects of any continued infringement.55 Such circumstances often arise in cases of infringements by generics companies.56 Whereas the damage caused by them, if the patent is later maintained, is often considerable and irreparable (in view of the fall in price caused by a corresponding change in the prescribed drug price), the effect of an injunction which proves to have been unjustified (because the patent was subsequently revoked) is merely to deny the generics company access to the market temporarily, which can be fully offset by appropriate damages from the patent proprietor. Bearing in mind, moreover, that a generics company rarely takes any economic risk of its own in relation to its market activities (because, thanks to the proprietor, the drug has already been duly tested and is established on the market), a prohibitive injunction should be granted even if the infringement court is not absolutely certain of the patent's validity but considers that there is more evidence in support of than against validity.

However, by the same token, the need for a decision confirming the patent's validity also means that, as soon as such a decision has been issued, the court must usually presume that its validity is sufficiently certain.57 It would be inconsistent with the requirement of effective provisional measures in patent cases (Article 50(1) TRIPS; Article 9(1)(a) Directive 2004/48/EC on the enforcement of intellectual property rights) if infringement courts were always to await the definitive closure of the opposition or revocation proceedings before ordering such measures. Rather, they must accept the decision to maintain the patent issued by the competent authority or court (German Patent Office, EPO, BPatG) following an examination by technical experts and, unless the specific case involves special circumstances, act accordingly by issuing the injunctions required to protect the patent proprietor.58 An infringement court only has reason to call the validity decision into question and deny an injunction if it considers the line of argument adopted by the body deciding on opposition or revocation to be unreasonable or if the challenge mounted to the patent on appeal against the opposition or revocation decision is based on (e.g. new) promising arguments not yet taken into account and ruled on by the bodies which have examined the case so far. By contrast, it is not acceptable for an infringement court to refuse an application for interim relief, even though the patent was maintained at first instance, solely because it prefers its own assessment of the technical facts over an equally acceptable analysis by the body competent to rule on opposition or revocation.59

As a general rule, if the patent has already been revoked at the time of the application for interim relief, the infringement court must deem its validity to be so uncertain that an injunction can no longer be considered.60 It may, exceptionally, find otherwise only if the decision to revoke is manifestly defective and it can therefore predict with certainty that it will be overturned at the next instance.61 This requires not only a finding that the reasons for the revocation are manifestly erroneous but also that the court reliably establish that there can be no other ground for revocation. It will only be able to do so if the patent is directed to technical subject-matter which it can assess on the basis of the parties' factual submissions and its own expertise.62 In addition to the manifestly erroneous nature of the revocation, the patent proprietor must also face an extraordinary prejudice if he is prevented from enforcing his prohibitive rights until his appeal against the revocation has been decided. This goes without saying where the patent is for a medicinal product and its proprietor is faced with the emergence of companies manufacturing generics. In such cases, the applicant for interim relief must also substantiate his submissions in that respect.63

(d) Divergent interpretation

If, after closure of the proceedings for interim relief, the patent is interpreted in the validity proceedings in such a way that it can no longer be presumed that the proprietor will continue to use it, this constitutes a subsequent change in circumstances justifying dissolution of the interim injunction (Sections 936 and 927 ZPO).

3. Provisional stay of enforcement

Finally, an aspect which must also be addressed in connection with Germany's bifurcated system is the defendant's right to apply under Sections 719 and 707 ZPO for a provisional stay of enforcement of a verdict that he is guilty of infringement (which, if the patent is found to be invalid, will have been reached wrongly), since this measure alleviates the potentially detrimental effects of separating the decisions on infringement and validity.

Generally, an application for a stay of enforcement is unlikely to be granted where the creditor is required to furnish security prior to enforcement (as Section 709 ZPO requires for all LG judgments) because such security is deemed duly to protect the defendant's interests, so that the claimant's interests take priority. Moreover, in the area of patents, it is wise to exercise caution where a claim for an injunction is involved and the patent in question will soon expire.64 Thus, a stay of enforcement will, as a rule, be considered only if strict conditions are met,65 for instance where, when the decision on the application is taken, it can be presumed on the basis of a summary examination that the enforceable judgment will be annulled. A provisional stay of enforcement subject to provision of security is usually appropriate where, following delivery of the LG judgment at first instance, the patent in suit is revoked in its entirety or at least to the extent that it no longer protects the contested embodiment.66 Such an order is likewise appropriate where the opposition or revocation hearing has been adjourned because the proprietor has produced limited auxiliary claims and the opponent or party seeking revocation must therefore be given an opportunity to search for other prior art in the light of those claims,67 provided the embodiment contested in the proceedings on the merits does not use the claims as limited.68 The adjournment makes clear that, at best, the auxiliary request is considered valid, and that revocation of the patent as granted is likely.

By contrast, the mere fact that the party seeking revocation later discovers other prior art and the scheduled hearing date is adjourned to enable the court and the defendant to the revocation action duly to prepare does not suffice for an order to stay enforcement. Rather, the court of appeal must examine the new citations to establish whether they would have justified a stay of the infringement proceedings before the LG based on the strict criteria which the latter court must apply. Only if that is the case can the court consider ordering a stay of enforcement.69 The same principles apply where the defendant relies on a challenge to validity made only shortly before or even after closure of the final LG hearing. If there is no plausible excuse for the failure to introduce the objections at first instance for a decision by the technically qualified judges (e.g. because the defendant deliberately withheld the prior art concerned), a stay of enforcement is appropriate only if the appeal court can already establish with certainty after a summary examination that the patent will be defeated by the - inexcusably belated - action for revocation.70 Any doubt must act to the defendant's detriment.

II. "Exceptions" to bifurcation principle

There are, nevertheless, exceptions to the bifurcated system: one fictional (Formstein objection), the other genuine (utility model).

1. Formstein objection

The Formstein objection71 can be raised where the contested embodiment does not implement the patent features as literally worded but rather by way of an equivalent use. The objection is then available to the defendant as a special substantive defence.

(a) Requirements

The Formstein rule has it that a contested embodiment cannot fall within the scope of patent protection if, having regard to its features as a whole (as realised partly in accordance with the patent's literal wording and partly by equivalence), it is anticipated by or obvious in the light of the prior art relevant to the patent.72 The idea behind the rule is that the doctrine of equivalents should not operate so as to extend the patent at issue to protect subject-matter which is part of the prior art and for which the proprietor therefore could not have been granted patent protection.

It should be observed that a Formstein objection is not based on individual features (e.g. only those realised by way of equivalence), but rather the contested embodiment as a whole must be obvious in the light of the prior art. The contested embodiment cannot be assessed independently of the patent, but rather must be regarded as an equivalent use, meaning that the patent claim must be taken as the basis for examination, although the equivalent features must be worded differently from the claim.73 It is this contested embodiment which must be either anticipated by the prior art or obvious. If it is necessary to obtain several documents to substantiate the Formstein objection, then not only must it be possible to gather all features of the contested embodiment from these citations without further analysis, but the combination of documents from which the contested embodiment is derived must likewise be obvious to the skilled person. The more documents are required to substantiate the objection, the harder it will be to establish this.

(b) Limits

The scope of the Formstein objection is subject to a significant objective limitation in that, because jurisdiction is divided between granting authorities and infringement courts, the patent office is exclusively competent to assess patentability, whereas the infringement court must take the patent grant as a given and, lacking competence to conduct its own investigation, follow the decision issued in the grant or revocation proceedings. Its examination of the Formstein objection that, in view of the prior art, the contested embodiment cannot be considered a patentable invention must not run counter to this division of jurisdiction. Consequently, it cannot find that the contested equivalent does not fall within the scope of patent protection solely for reasons which – if applied by analogy to the subject-matter of the patent in suit – would inevitably lead to the conclusion that it does not contain a patentable practical technical teaching.74 The Formstein objection can therefore be allowed only if the cited prior art actually relates to the equivalent variation, and not merely those features of the patent claim literally realised by the contested embodiment.75 Otherwise, the infringement proceedings would no longer be confined to establishing whether the specific form of infringement, which as an equivalent variation of the literal claim wording has not yet been examined as such in a grant procedure, is a patentable invention, but would impermissibly call into question the finding as to the allowability of the patent in suit which is binding on the infringement court.

2. Protectability of a utility model

Although utility models are registered after a mere examination of compliance with the formal requirements, they confer on their proprietor essentially the same rights as a patent (i.e. right to seek an injunction, compensation, etc.), and only their term is shortened to ten years. Since there is no substantive examination as to novelty and level of inventiveness prior to registration, such an examination must be performed if infringement is alleged. The infringement court can find the defendant guilty on the basis of the utility model only if, in the light of its own examination (and, if necessary, aided by a technical expert), it is persuaded that it is indeed registrable (i.e. novel and inventive).

This means that a defendant accused of infringing a utility model can directly counter the action by citing the model's non-registrability in support of a request for its dismissal. However, as in patent cases, the defendant also has the option of contesting the model in separate validity proceedings (via an application for cancellation) and then requesting that the infringement proceedings be stayed (Section 19 Gebrauchsmustergesetz - Utility Model Act). The infringement court must grant that request if it, too, considers the model to be non-registrable. Otherwise, it may exercise discretion and, in practice, courts having doubts as to the utility model's registrability will at least await the outcome of the cancellation proceedings at first instance. The infringement court loses competence to examine registrability as soon as a final decision has been taken on the request for cancellation. A decision to cancel is binding erga omnes, whereas a refusal to cancel is binding only on the parties to the cancellation proceedings. Accordingly, the infringement court can dispense with reaching its own decision on the model's validity only if the defendant was a party to the definitively closed cancellation proceedings.

Whether defendants accused of infringing a utility model decide to assert that the utility model is invalid only as a defence in the infringement proceedings or, additionally, to contest it in an action for cancellation - which is a matter entirely at their own discretion - will depend on the circumstances, in particular the technical background to the utility model in question. In some cases, the underlying technical facts may be so complex that it will be risky merely to assert invalidity in the infringement proceedings. Defendants should also bear in mind that claimants have more extensive means of defence if the challenge to their utility model is limited to the infringement proceedings, because they can then cite the model in a form adapted to the contested embodiment and so conferring very narrow protection,76 whereas in cancellation proceedings, which ultimately determine the model's fate with erga omnes effect for the future, they will usually seek to have it upheld with the broadest possible scope of protection.